Asos’ half-year profit decreased due to expansion costs and strong discounts.
The online retailer saw its pre-tax profit drop 87% to £4 Million due to “temporary transition costs” associated with its deposits in Atlanta and Europe. In the United States, Asos was hit by personnel problems, resulting in late applications, while in Europe the group automates its deposit in Berlin.
Sales increased 14%, or 12% at a constant exchange rate, to £1.3 Billion in the six months prior to February 28. Sales in the UK increased by 16% and international sales by 12%.
However, the company complained of disappointing numbers, with an emphasis on the cost of adding new storage capacity and a high level of discount and promotion to the market.
Nick Beighton said, “We have identified a number of things on which we can improve and act on. We are confident that we will improve performance in the second half of the year and not change our forecasts for the year.
“We are nearing the end of a major investment program.
“While this has inevitably led to significant disruptions and transition costs, overall capacity now gives us more confidence in our ability to continue to gain market share while we restore and accelerate profitability.”
In December, the company warned that gains could be lower than expected due to a significant worsening in trade that preceded Christmas.
The announcement said the company was not resistant to the economic downturn, in part as of Black Friday’s disruptive effect on the usual retail calendar.
British cosmetic and fashion retailer has also heavily invested in its plastic bags that can be recycled 100%. At present, only 35% of its plastic bags are recycled. It is also looking forward to eradicate its environment foot prints, relative to the clothes it puts for sale.
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